Q3 2024 Inter & Co Inc Earnings Call
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Speaker Change: Good afternoon, and thank you for standing by welcome to enter and coast third quarter of 2024 earnings.
Call.
Speaker Change: Today's speakers harsh who owned venture minute enters its global CEO Alexandra Riccio, Brazil, CEO, Santiago, Stell, Senior Vice President and CFO, and Rustler, Vitoria, Chief economist and ire O.
Speaker Change: Please be advised that today's conference is being recorded and a replay will be available at the company's IR website.
Speaker Change: At this time, all participants are in listen only mode.
Speaker Change: After the prepared remarks, there will be a question and answer session.
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Speaker Change: Throughout this conference call, we will be presenting non <unk> financial information.
Speaker Change: These are important financial measures for the company, but are not financial measures as defined by our F. R. I S.
Speaker Change: Reconciliations of the company's non <unk> financial information to the I F. R. As financial information are available and enter in COSE earnings release and earnings presentation Appendix.
Speaker Change: Today's discussion might include forward looking statements, which are not guarantees of future performance.
Speaker Change: Please refer to the forward looking statements disclosure in the company's earnings release and earnings presentation.
Mr. Zwanziger: Now I would like to give the floor to Mr. Zwanziger minute, Sir the floor is yours.
Mr. Zwanziger: Thank you operator Hello, everyone.
Mr. Zwanziger: Thanks for joining us on Oracle today.
Mr. Zwanziger: As always Costar group of overview at our strategy before giving the floor to shorten your insight you today I would like to spend some time sharing my thoughts on how unique our financial Super App is.
Mr. Zwanziger: I see it as having creaky diminish.
Speaker Change: First our differentiated platform. It is complete has it Beth UX UI with a 4.8 rating in Apple store. It goes far beyond banking and it is global by offering our products across many countries.
Second the massive number of clients that transact with us rip.
Speaker Change: We're proud of pattern reached 35 million clients, producing a massive level of interaction inside our ecosystem.
Speaker Change: With for instance, 15 million logins per day.
Speaker Change: And last but not least the high level of Principality.
Speaker Change: As most of as most of you know the relationship with our clients.
Speaker Change: Parts with the destock called which has helped us drive couponing.
Speaker Change: And from mute drive upsell and cross sell into credit Conservatives.
Speaker Change: These two dimensions shows how powerful our platform fees.
Speaker Change: It's great for a strong network effects that reinforce a beautiful site that combines growth with profitability.
Speaker Change: To show the power of this network effect, we show, how we were able to generate alpha across many verticals.
People don't just use banking services.
Speaker Change: They engage across our different businesses.
Speaker Change: Granted.
Speaker Change: Investments insurance.
Speaker Change: Dropping global and loop our loyalty program.
Speaker Change: In each of these areas, we're growing at a much faster pace than the market.
Speaker Change: Two great examples are.
Speaker Change: FX transactions.
Speaker Change: We are growing 74% or 3.8 times more minute market.
Speaker Change: In credits, which were have grown three five times faster than the market.
Speaker Change: <unk> consistently expanding our knee and keeping sound asset quality metrics.
Speaker Change: In summary, this page shows our exceptional ability to attract clients and cross sell our products capturing market share gains.
Speaker Change: Promoting cross selling upselling and engage with clients is one of my folks.
To achieve this we work strongly to remain innovative.
Speaker Change: Pershing differ fear of technology, and bring new solutions to our clients.
Speaker Change: We'd like to name a few of our recent initiatives and the innovation front.
Speaker Change: First the hyper personalization.
Speaker Change: We're getting better and better every day.
Speaker Change: And we're seeing excellent results by driving conversion increasing sales.
Speaker Change: Second the a L. The AI powered ether shop close here.
Speaker Change: It drives traffic and monetization in our E Commerce platform.
Speaker Change: We'll be launching our next black Friday, and we have high expectations to continue driving growth of inter shop and soon into other verticals.
Speaker Change: Third the photo or a content platform, which was launched last Barker and has now over 5 million users.
Speaker Change: It is designed to discuss personal finance investments market trends brought up loans.
Speaker Change: And much more.
Speaker Change: It's a new way to engage within the financial Super App and promote cross selling while fostering a sense of community among broker.
Speaker Change: When it comes to engagements are a focus on clients has resulted in several impressive milestones.
Speaker Change: We achieved more than one point to one point to create new highs and our run rate to PV.
Speaker Change: Showing how our clients use the platform daily not.
Speaker Change: Exponentially.
Speaker Change: We also repaid 122 billion highs in AUC.
Speaker Change: Of which 50 below highs in deposits a great indicator of how much real clients Trust us.
Speaker Change: To give a sense of dimension, we received their own 21000 deposits per hour disc marker.
Speaker Change: For more than 18 million.
Speaker Change: Individual depositors.
Speaker Change: And we already have over 3.6 million clients investing saving by in banking in the U S where.
Speaker Change: Who are changing the way people bank globally.
Speaker Change: Today, we can clear international transactions within a few seconds.
Speaker Change: The great thing about all of this is that there is much more to come to improve and to explore.
Speaker Change: In summary, what I presented give me gives me strong confidence and excitement on what lies ahead.
Speaker Change: We have been working very diligently on executing the plan Barker after quarter and the results are paying off.
Speaker Change: Combining profitability with innovation has proved not only to be possible, but also an excellent recipe to remain competitive.
Speaker Change: As you can see on the page the results of these six studies that it Glenn are very strong and speak for themselves now I'd like to give the floor to <unk>, who will provide more details about our opportunity to M achievements in each of our verticals.
Charlie: Charlie Please go ahead.
Charlie: He was wrong and thanks, everyone for being with us I'd like to begin by focusing on those who are the center of everything we do our clients were excited to report that we have reached 35 million clients and welcomed 1.1 million new active clients this quarter.
For seven consecutive quarters, we have successfully increased our activation rate, which now stands at 56% the highest since the fourth quarter of 2021.
Charlie: Our refined onboarding process combined with the apps hyper personalization has significantly improved our ability to engage clients. After the Onboarding conclusion for example between the third quarter of 'twenty 'twenty Choo ended third quarter of 'twenty 'twenty four hour early activation.
Charlie: Ratio.
Charlie: Increased by 12 percentage points going from 40% to 52%.
Charlie: Now I would like to focus on our business clients as we have highlighted <unk> previous quarters, we believe that traditional banking solutions for businesses are falling short of effectively meeting their needs. This is an opportunity for us and we're seizing it.
We've seen growth once again with a number of bases accounts, increasing by 22% year over year, reaching $2 2 million, representing a 10% penetration in all businesses across Brazil.
Charlie: Our focus has been particularly strong among small and medium sized businesses, which dance rigs EBIT higher activation rates embark back we're dedicated join enhanced client experiencing this segment recognizing the opportunity it presents.
Charlie: Now moving to slide 13, our deep dive into our seven business verticals.
Charlie: In banking the PPV has shown an increase of 46% year over year, reaching 320 million packs.
Charlie: <unk> actions need through a big sort of 294 beat and react in a single quarter with either capturing 8.1% of this market.
Charlie: This quarter volumes and growth from credit cards have once again surpassed those from their.
Charlie: Resulting in higher interchange revenue and consolidating the improvement of quality of occupancy.
Charlie: The improvement in this mix has led to a 38% year over year in creating interchange revenues.
Charlie: Moreover, as we have consistently observed in the past few quarters, we're continuously increasing PPV levels, among both new and existing cohorts.
Charlie: This is a direct result result of our strategies to better understand our clients' life cycles and use the right tools and the right moments to engage them effectively with our products.
Charlie: Now moving to credit.
Charlie: Pleased to report strong growth in our new credit lines consumer Finance 2.0, which includes big financing buy now pay later and overdrafts.
Charlie: In the quarterly comparison, we saw a solid 52% increase reaching a combined total of 503 million reais in portfolio.
Charlie: This quarter, we expanded our product to a broader client base and implemented user experience improvements that are already yielding results such as acceleration of adoption and higher duration in the portfolio.
We expect to maintain healthy growth in these product lines.
Shifting to our marketplace.
Charlie: The third quarter have an encouraging performance with a growth in an annual basis of 15, 9% in our G. M. D that reached $1 4 billion Reais.
Charlie: Our hyper personalization approach is increasing our conversion rates for sales as the offerings that each client six are more and more aligned to their moment.
Charlie: Clearly our buy now pay later product achieved around 6% of the total G. M V. Unimpressive number for a payment method that is still new for many of our clients.
Charlie: Regarding loyalty, we achieved 10 million clients continuing loops gross baths.
Charlie: This quarter, we launched new ways to redeem points include the peaks insurance and soccer tickets leveraging our strategic partnerships in soccer.
Charlie: Moreover, clients can now earn points by spending with debit cards in their global accounts, we continue to see loop clients as more engaged than non loop clients as they generate a two times higher are back.
Charlie: In investments, we surpassed 122 billion re IV that E method center custody, serving over $6 3 million active clients endeavor in the vertical which represents a 50% increase year over year.
Charlie: This was the fastest increasing AUC that we have observed in a single quarter.
Charlie: Piggy bank or Milwaukee, New in Portuguese has demonstrated an impressive adoption and achieved over 2 million clients and 48% quarter over quarter growth in AUC.
Charlie: This product has become an important funding distribution assets for anchor.
Reaching $3 4 billion in AUC in the coffee for nearly 7% of our total funding on.
Charlie: On the insurance front, we continue to witness accelerated growth.
Charlie: Our sales have now surpassed one 3 million.
Charlie: Driven by new growth initiatives.
Charlie: Furthermore, this quarter, we achieved $3 4 million active contracts in insurance with am 115% year over year growth.
Charlie: In the high margin vertical all supported by our asset light and highly scalable business model.
Charlie: Additionally, our focus on hyper personalization has unlocked numerous opportunities within these vertical enabling us to deliver the right product to the right clients and significantly boost our sales even for niche offerings.
Charlie: Finally on the global front, our deposits along with assets under custody and assets under management have reached a miles the milestone of one $4 billion. As we now are able to offer managed accounts for our clients investing abroad.
Charlie: These achievement is an important milestone in our NAV. This of our strong performance in the U S. B.
Charlie: Within this vertical we have reached $3 6 million clients.
Charlie: Which are typically higher income Brazilians with frequented travel Ami VAT in the U S.
This growth in engagement in our global operations, our firms our dedication to expanding our reach and delivering valuable financial solutions to our clients regardless of geographical boundaries.
Speaker Change: Now, let's turn to page 22.
Speaker Change: In this light with zoom into the evolution of products that have more than 1 million active clients.
Speaker Change: As we evolve we have been able to reduce the cycle time to achieve large scale adoption of the products, we launch reflecting not only client engagement, but also our ability to make the right choices.
Speaker Change: And to execute properly our product strategy.
Speaker Change: This progress is an evidence of the three dimensional approach that's wrong highlighted earlier.
Speaker Change: Most importantly, this momentum is translating into noticeable improvements in our market share for several products.
Speaker Change: Enhancing our competitive positioning.
Speaker Change: In the industries, we participate.
Speaker Change: Talking about market share on page 23, we dive in our share evolution for a few products.
Speaker Change: One year ago, we held a significant pigs market share showcasing their highly engaged client base within our financial Super App, we emphasized that the unimportant part of our mission. Once you close this gap between big share and are hearing other products their results have been.
Speaker Change: I'm positive.
Speaker Change: <unk>, providing our clients with access to our extensive product range.
And increasing our share of wallet.
Speaker Change: Important to highlight that this evolution is happening both on granted in fee businesses.
One more evidence of our well executed three dimensional strategy.
Speaker Change: As we continue to expand our product offerings and enhance client engagement I am confident that will further solidify our position in the market.
Speaker Change: To finish on slide 24, we show that despite the significant evolution of the market share. We're just beginning.
Speaker Change: Our client centric approach boosted by hydro personalization.
Speaker Change: <unk> optimized our sales efficiency as we fish in our Omaha aquarium.
Speaker Change: There is still significant potential to grow business by conquering share of wallet and on top of that we maintain our focus on new client acquisition.
Speaker Change: We believe that maintaining product evolution.
Speaker Change: Proving client service and having an edge on our overall value proposition will be key to maintaining the positive trends should deepen market share and increase Brexit panic.
Speaker Change: Now.
I would like to pass the word society, who will take us through the financial section 30, the floor is yours.
<unk> Hello, everyone really impressive slide 23, showing the conversions to 8% marketshare now jumping to the financial results.
Speaker Change: Starting with our loan book, we use 10% this quarter, surpassing 38 billion highest ever.
D S and home equity the two collateralized products with the highest roe's achieved record levels of underwriting surpassing the 6 billion in combined loan balance.
Speaker Change: Regarding personal loans, which is primarily comprised of payroll loans, we focus on three main fronts. The first one digital underwriting we successfully implemented the 100% digital process for ion assess our CIP. Our two main distribution channels. We're also advancing with our digital portability.
Speaker Change: Which we believe will further enhance our origination capacity of this product second we focus on market share gains I send the mentioned, we have a significant opportunity to leverage our existing payroll operations by fishing in our own aquarium currently we hold our own one person payroll loan market share.
But we have the potential to increase these two 5% by bringing our growing clients through portability.
And third focusing on higher ticket clients, we have increased our capacity to target. These higher ticket clients by improving the efficiency of our commercial effectiveness. Moreover, we have many opportunities to increase ticket size Mia hyper personalization not only with public sector employees, but also on the price.
Speaker Change: Once as well.
Speaker Change: On credit cards, we presented at 25% growth on an annual basis.
Speaker Change: Going forward, we expect to accelerate growth by continuing to run more leaning store existing clients, while enhancing financing options such as Dick's financing and experiment with interest.
Speaker Change: Finally, I believe illness, and Smbs are two segments that we're deploying our balance sheet strategically bear advising clients with strong principality on synergy potential now reinforced with our Interbody acquisition.
Speaker Change: Yeah.
Speaker Change: Moving to page 27, we continue to operate a high quality highly collateralized grade portfolio, making it resilient to grade cycles.
Speaker Change: Both MPL showed improvement with a 15 to 90 day standing at 3.6, and the 90 day plus decreasing to four 5%.
Speaker Change: This represents an improvement of 30, and 20 bips, respectively, when compared to the prior quarter.
Speaker Change: The graveyard mpls when seen across cohorts continues to show strong performance, thus validating the improvements in our underwriting model.
Speaker Change: With this scenario NPA formation, we made stable around one 6% while stage three formation increased slightly to convert with resolution 496.
Speaker Change: On page 27, we can observe the evolution of our grade cost of risk metric.
Which has been flattish at 541%.
Speaker Change: Continued focus on improving our underwriting models to whether with the collection practices, which are the ultimate drivers of our asset quality trends. Furthermore, our coverage ratio has remained stable at 130%.
Speaker Change: The sky carried level of provisions combined with a high widely collateralized portfolio enables us to operate with consistent performance through time.
Speaker Change: Moving to page 29, you.
We had another strong quarter of a robust funding franchise, surpassing the 50 billion highest mark.
Speaker Change: This growth was primarily driven by time deposits and transactional deposits pits, which increased 40 and 30% reset respectively.
Speaker Change: The mix remains strong with transactional deposits accounting for approximately 32% of our total funding base.
Speaker Change: In terms of relative growth. It is interesting to notice that transactional deposits grew in line with our loan book at around 30%.
Speaker Change: Also very important to mention our active guidance kind of on average 1.9 thousand Harris in deposits a record level that highlights the primary relationship with us.
As shown in the prior page, we had a large growth of time deposits, mainly due to the success email parochial, which achieved 3.4 being hands.
Although this growth was compensated by our transaction deposits performance, which as mentioned grew 30% on a last 12 month basis our cost.
Speaker Change: Cost of funding remained flat at six 8%.
Speaker Change: Jumping into page 31, we're thrilled to report a remarkable quarter in terms of revenue breaking previous records once again.
Speaker Change: We reached an impressive year over year growth of 25% in total gross revenue and 32% in net terms.
Speaker Change: The gross revenue achieved 2.7 million highs with a net revenue of $1 6 billion ahead.
Speaker Change: Both fees and NII experienced strong growth, even when excluding the effects of in the bag consolidation validating the effectiveness of our diversified business model.
Speaker Change: Our strategy of Hubbard personalization and targeting marketing is becoming a driving force behind our revenue growth.
Speaker Change: Moving on to page 32.
Speaker Change: As a consequence of higher engagement, which was accelerated by our hyper burst 90 station strategy, we're able to achieve a red car monthly or back of 32.5. He is.
Speaker Change: This growth was primarily driven by a robust performance in fees, which had an increase of 20% just this quarter.
Speaker Change: They key contributors of this growth were intercept insurance distribution FX and interchange.
Speaker Change: These area demonstrated high levels of recurring active plans to incentive on a daily basis within the platform significantly enhancing our fee revenue lines.
Speaker Change: We also reached a record margin per active client of 19 point and has continued our trend of sequential improvements quarter after quarter.
Speaker Change: We believe that this demonstrates our ability to effectively monetize our customer base when capturing economies of scales in terms of cost.
Speaker Change: Let's now deep into our interest income specifically focused on nims.
Speaker Change: We are pleased to report record breaking level nims before and after deducting cost of risk.
Speaker Change: Both our NIM 1.0, which means including in the denominator the noninterest accrual of credit cards.
Speaker Change: And then in 2.0, which excludes these noninterest receivables were showing a positive upward trend compared to prior quarters, even within the negative inflation of the quarter.
Speaker Change: When we consider the risk adjusted NIM, which <unk> cost of risk. The performance is even stronger further highlighting the work that we have been doing in optimizing our deployment of capital.
Speaker Change: In page 34, we can see the NIM improvement on a different perspective this time in relation with the CDI rate.
Speaker Change: <unk> 2.0, reaching into one 7% and immune 1.0 reached nearly 80%.
Speaker Change: As you can see clearly this performance has consistently improved over the past quarters Greenborough diligent use of our balance sheet across portfolios.
Jumping into expenses, we continue to invest strategically in core areas that will help us drive the future of the company.
Ethane particular marketing technology and talent.
Speaker Change: In terms of advertising and marketing, we focus on attracting high quality clients in terms of engagement and Principality and we also initiated the second wave of our branding campaign to continue increasing awareness.
Speaker Change: In personal expenses, we grew mainly in technology environment to support our new and existing initiatives always focusing on the leering dumped weighted products to our clients.
Speaker Change: Additionally, the integration of inter by in the third quarter resulted in an increase in expenses, particularly in personnel.
Speaker Change: Strong optimization potential in the coming quarters.
Speaker Change: We're proud of their he says we have achieved through our cost control initiatives through a gorgeous and expect to continue having significant gains in the coming quarters.
Speaker Change: Jumping to our operational leverage page this quarter as I mentioned, we integrated in their bag back in July.
Speaker Change: This company will become a business unit inside of inter study with a standalone efficiency ratio close to 100%.
Speaker Change: Going forward, we expect significant synergy gains from interbank to a cost structure optimization combined with accelerated revenue growth growing significant opportunities to drive further operational leverage.
Speaker Change: In terms of efficiency ratio, we achieved 51, 7% and $48 seven when excluding thereby continuing our head of our 60 30 30 plan in this specific metric.
Speaker Change: To conclude I'll.
Speaker Change: Like to highlight our performance in terms of profitability as presented on page 37.
Speaker Change: This quarter, we achieved another record breaking Io therapy.
Surpassing the double digit mark on reaching an impressive 11, 9% and 11, 3% when excluding non controlling interest.
Speaker Change: Our reported net income of 260 million <unk> or 243, when excluding Noncontrolling interest is two five times higher than the net income of the third quarter of the prior year.
Speaker Change: We believe that the strong performance shows our commitment to drive sustainable profitability, while creating a truly differentiated platform that is built to succeed in the long term.
Now I will pass it back to <unk> for his closing remarks. Thank you.
Sachi: Thank you sachi.
Speaker Change: To conclude I believe we have a quite good quarter.
But don't get me wrong, there is still a lot more to deliver and I would like to assure you myself and the rest of the team we work relentlessly to keep delivering the best financial product form to all our stakeholders, which are our clients.
Speaker Change: Our employees.
Speaker Change: The regulators are our community and of course to our shareholders. Thank.
Thank you for the support and remember the best is yet to come.
Speaker Change: See you bye bye.
Speaker Change: Yeah.
Speaker Change: We will now begin the question and answer session. Please note that in the interest of time, we will allow each participant to ask one question with one follow up for each question.
Speaker Change: Once again for this Q&A session. We ask you to write down your question via the Q&A icon at the bottom of your screen. Your name will then be announced and you will be able to ask your question lives.
Speaker Change: At this point a request to activate your microphone will appear on your screen.
If you prefer not to open your microphone live please write out no microphone at the end of your question and our operator will read your question out loud.
Speaker Change: Our first question comes from Mr. Tito Lavazza from Goldman Sachs Miss.
Speaker Change: Mr Laboratory, we are now opening the audio so you can ask your question life.
Speaker Change: Please go ahead Sir.
Speaker Change: Hi, Good afternoon, everyone. Thank you for the call and taking my question. My question just to understand I guess, the the incorporation of inkjet peg and near the pickup in expense is now you may <unk> you.
Speaker Change: You get some operating leverage.
Speaker Change: But just to understand.
Speaker Change: Well I guess, one how do we think about expense growth from here.
Speaker Change: And if you can maybe to quantify or help us think about that operating leverage ranking I mean, we used to have a lot to go to get the 30% efficiency ratio target, but does that does the implement the incorporation of <unk> tabak delay that in any sense or could it accelerate I should be thinking about that evolution from here. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you Denise and Darryl I'll take that one so on an efficiency ratio. This is the main entry error from the three main metrics of our CD 30, 30 plan, where we're the most a hail Mary when we reported the Atlanta when we presented the planning into the market. We went 70 M M.
Speaker Change: Only seven quarters of less than 40% of the time went by and rotary more than halfway into a dive into where I'm very excited of what we delivered in the it expense, France already we started with them.
Speaker Change: And with the lower hanging fruits are on the expense side and now the majority of the improvement on efficiency will come on the revenue side as we continue to cross sell the broader lesson and monetize our plan specifically on these quarterly efficiency ratio. We had a few things that played out and then I forgot are worth mentioning on the one hand, we have in play.
<unk>, which was a bit lower than in prior quarters, we have 0.8% rented to one from 1% in the second quarter, which is the same number we expect for the fourth quarter, 1% to 1% that had any bundle our own 50 million. He is in NII or 40 bps seen efficiency. We also invested in the structure now.
Speaker Change: That's in investment portfolio, our own 3.2 billion reais disease be civil and they're in their financial statements. These consumables in AI in their own 10 million. He is Bonnie Lee rates.
Speaker Change: Taxes in the in the bottom in their own 20, and he has another 30 bps of impact on the efficiency ratio and then we have the inter back situations Linda by we incorporated at the beginning of July so the entire quarter was part of our of our conglomerate. It has an efficiency ratio higher than 100%.
With 40 million revenues in 15 expense.
Speaker Change: And that has a huge potential in terms of organizing on both sides of the equation on revenues, we can cross sell our products to end up Atlanta, who can grow cell Linda byproducts to go into clients and showing that we can improve their efficiency to expand CS as we invigorate the platforms together so.
Speaker Change: Overall, we are excited on the efficiency, we think that the the work we're doing diligently to control expenses continues to play out nicely. We have some specific factors playing in the quarter, but overall, we think that the trend of continuation towards that 30% remains intact.
Speaker Change: Yeah.
Speaker Change: Okay, great, Thanks, and tableau and just one quick.
Speaker Change: Question on the tax rate, how should we think about the tax rate from here.
Speaker Change: Yes on tax rate and we see there a number on a yearly basis knows what we have to see a cumulative number and for that we are.
Speaker Change: Had a roughly about 20% we think that 20% ish is a number at which we will operate with this level of profitability, we need to have as I mentioned before than other her two brothers, where we invested people into below. He is we are paying a you'll see our deposit base as well and we are reallocating cash.
Speaker Change: From the operating entity of the main operating entity, which is I'm going to head into a holding which is tax efficiently in a lot of work in the past we've been able to at least now and we're beginning to see the benefits of that novel in the 20% level is where we expect to continue operating on a yearly accumulative basis.
Speaker Change: Okay.
Speaker Change: Okay, great. Thank you Sandy.
Speaker Change: Thank you Don.
Speaker Change: Okay.
Speaker Change: Our next question comes from Mr. Ricardo book, a table from BTG.
Speaker Change: Mr. Buck Peggle, we're now opening the audio so you can ask your question live. Please go ahead Sir.
But after no one of your one and thank you for the percentage of making questions I have and I have one here on my side.
Speaker Change: You mentioned that India has now a consumer finance portfolio of around 500 million highs. So like children Theres still a little bit of bad there what is reasonable to expect that for.
Speaker Change: These parts for your bi Yan and also next year.
Speaker Change: Any information that you could tell us about the the graph on this specific project Bush fire will be very helpful. Thank you.
Yes.
Speaker Change: Carlo agile in vitro speaking here thanks for the gradual.
And then if you recall, but I have been advocating for.
Speaker Change: This consumer finance two points of view portfolio for awhile.
Speaker Change: And if you break down the the number who have the big financing will have them by Napa leader at inter shop, and who have the overdrafts, we have been growing I would say quite fast we're coming from a very low base for us.
Speaker Change: We believe that maybe something close to 700 million ice at the A&D is Boston excuse me.
That's what to expect and we believe that 2025 2026 going to keep growing that.
Speaker Change: But again.
Speaker Change: You would know winter for Awhile, you would like to proceed but I always caution. So we're always monitoring how they are dealing with is evolving how we can improve the products to make sure that we'll have the right risk risk reward equation.
Speaker Change: We know that we have 8% market sharp peaks at big suite could and move wait away faster on that portfolio, but we're doing that.
Speaker Change: Let me step, but and we're excited for what perhaps are our transactional platforms big.
Speaker Change: And we have a very good underwriting approach on these three products and also very important and very good colleague from.
Speaker Change: Our approach through the App for industry product. So very excited I believe that's gone up Kip and are helping us to improve our nims going forwards so very.
Speaker Change: Very constructive on this on this consumer finance to point to your hubs.
Speaker Change: Oh, very clear and just a quick follow up if you could also mention if the debt their age in the microenvironment change in any way.
Speaker Change: The outlook for loan growth with you guys. If RMR you mentioned are being more cautious could it be more caution a little bit on the consumer finance.
Speaker Change: If you we should see something similar as well in the other products.
Speaker Change: Okay. He cargo, yes, we are always watching democracy.
Speaker Change: Important for sure the ability for clients to repay.
Speaker Change: Need to remember depth at Zynga, we have first of all.
Most of our portfolio collateralized you have always working this way.
Speaker Change: We have a very good cost of funding and therefore, what we're always cherry picking the clients that we want to underwrite a on the consumer finance, we tend to be more moral cautious when the Morocco, makhers deteriorating, but we need to remember that we still have.
Speaker Change: A small market share on credit underwriting on the markets remember so have 8% market sharp peaks a lot of deposits a low loan to deposit ratio the best cost of funding the industry with albeit up in place we can keep growing even on the unsecured portfolio.
Speaker Change: At a good base and also chunk, peaking and be a cautious with big with the dealing with so still confident that we're going to grow spite of the month.
Speaker Change: Thank you.
Speaker Change: The next question comes from Mr. Pedro Leduc from <unk> BBA. Mr. Ludovic, We're now opening the audio so you can ask your question lives.
Speaker Change: Please go ahead Sir.
Speaker Change: Thank you guys put up for the question I'm, sorry, if you have already made a dropped out but the first and comment a little bit on the credit card.
Speaker Change: <unk> performance has been delinquency bid interest bearing are you feeling that it seems to be growing fast, but if it fits really something you feel comfortable and continue accelerating next year and the second question. If you can comment or update us on the international side.
Speaker Change: <unk> story.
Speaker Change: Be it in size of revenue Rose R.
Speaker Change: Profitability.
Speaker Change: And Nigel has made some recent comments about.
Speaker Change: A broader international ambition, if you can update us there as well thank you.
Speaker Change: Highly book this is Shawn speaking I'll start with the credit card and Andrew Ang will fill in subordinate their national parks and so on credit cards, we are seeing good improvement in cohorts, so new cohorts.
Speaker Change: Activating well with low delinquency a lot of control of the early delinquency metrics such as first payment before so we were being able to do what we've discussed in the past which is.
Speaker Change: Mi, which is like being able to drive the outcome using our underwriting models is working well and senior dangerously we're seeing there that's called the digestion of the delinquency of those older cohorts that we've been talking about for the last quarters like the 2021 cohort.
Speaker Change: Mainly ah, it's getting out of the way remaining good transactional clients.
Speaker Change: Having said that.
<unk> don't change if we look at Layne to 'twenty five 'twenty 'twenty seven we're still ain yet to having about 30% of our portfolio on credit cards.
And as we move on thinking about next year, we will keep also.
Speaker Change: Focused on increasing the there is there any portfolio. So it was all talked about the consumer finance 2.0, just in the last question.
Speaker Change: We will keep our focus on increasing products such SPX financing.
Speaker Change: Which we've been not only gaining traction but also observing.
Speaker Change: Very good delinquency levels as we move forward.
Speaker Change: With that I'll pass the word to draw so he can comment on international.
Speaker Change: <unk>. Thanks for the question John.
Speaker Change: <unk> speaking.
Speaker Change: They are global expansion, which we're doing that through our global account approach, it's going really really well. So we when we envisioned two years ago to launch that product were to be honest.
Afraid of what would be the outcome and as of today.
Speaker Change: 10% of our clients they have and they use the global comp a feature I would say yes.
Speaker Change: They are using it both for investments.
Speaker Change: Foreign service.
Speaker Change: We see that we have as of today, a very good volume in AUC a rat in U S. We have good typically on debit cards launch into credit car by beginning of 2025 I'm going to be very interesting. We have also our shop initiative.
It's starting to gain momentum here and we have also our mortgage portfolio any momentum as well.
Speaker Change: About other geographies that you mentioned.
Speaker Change: Actually I was I have I was in a podcast.
Speaker Change: Two months ago trying to explain a little bit about our global account approach. So.
Speaker Change: What we envision is by having a solid foundation in the U S. Having our account here all secured splatter farm, our shopping platform, we could offer them not only for Brazil, but to other geographies as well, but different from what to have them review.
Speaker Change: Where we have at the bank lies in the ports for end to end our capital we could go to other geographies through banking as a service and just launching the global couch the global comp approach to adapt clients over there. So we think that 20 to 25 will be a year for us to try somewhat in there mark.
Speaker Change: And you.
Speaker Change: We will let you know as soon as we decide which markets that will be but excited that this is an asset light approach very feed.
Speaker Change: Feed business oriented and very excited with the.
Speaker Change: The quality of the clients that we attract Lin who launched the global account.
Speaker Change: Our product in.
Speaker Change: In Brazil so.
Speaker Change: We're excited with.
Speaker Change: This initiative for 2025.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Mr. Yuri Fernandes from J P. Morgan Mr. Fernandez, we're now opening the audience. So you can ask your question live. Please go ahead Sir.
Speaker Change: St. Joe Good afternoon, dwell chunky shandy.
Speaker Change: The one on capital year out when we go Chi or Youre, correct, which one is dropping and it provides some explanation on operational risk and some other things, but going to the core capital in nominal terms right like the amount of capital there was a decrease on the sponsored part over parts of why your earnings was up so just trying to understand what role.
Speaker Change: <unk> today on a cap or capital.
Speaker Change: And then it can do a follow ups. Thank you.
Speaker Change: Ut air.
Speaker Change: Okay, I think that volition. So we had an incorporate housing their bag. It created goodwill for 90 million has twilio.
Speaker Change: Together with the IOC or GCB payment from Nevada to hauling and the mark to market of the portfolio of investment Securities of three M had negative impact this quarter and I think that the regulatory capital or reference carried on in the central and we find it.
Speaker Change: So briefly our scented if I may just a follow up on expenses.
Speaker Change: Let's get to your speech on cost to income, but going through one line specifically that was personal expenses, even when we stood either buying there was a big increase.
Speaker Change: Can you provide more color.
Speaker Change: What is driving their inquiries like which areas you are hiring.
Speaker Change: When should we see I don't know any improvement on on those Idaho projects, just trying to understand because we have at the head count increase and I'm not sure. How much you think there by getting the number of head count, but the shirt at these inquiries are here, it's not only E. R. L I F.
Speaker Change: Profit sharing and any inflation there may be I don't know all the initiatives that you are hiring in elektron.
Speaker Change: And what's your equity or your energy. Thank you guys.
Speaker Change: Yeah, I can think I wanted to zero in on year. One of the plan. We went down from 4100 inventories to 3003 hundreds of wood with boots on the employee front quite a lot that was 2024 on this year, we are reinforcing certain teams, where we think we can.
Speaker Change: Significant value to the offering and the platform, particularly on technology, but also on other fronts as well the average compensation of executives in the company in many cases is increasing we're bringing top talent from from the market in.
In Brazilian and globally and we are also M expensing more bonds now a more on on compensation bio compensation as the net income growth not grow, albeit so the combination of those factors is the one that continues to to them to drive the personnel expenses on the IHOP.
And we think that for 2025 with incorporation of many automation processes. We're doing in AI, we hope to continue high operational leverage on the person on the expenses front as well.
Donoso Brittler, Cynthia and data processing was pretty good I guess there was some operating leverage there. The personal line was the one that caught my eye on station to mold. So thank you for the clarification. Thank you guys.
Speaker Change: Thanks Judy.
Speaker Change: Our next question comes from Mr. Gustavo <unk> from Citi.
Speaker Change: Mr. Schroeder, we're now opening the audience. So you can ask your question life. Please go ahead Sir.
Speaker Change: Hi, good afternoon, everybody and thanks for taking my question I have two questions. The first one is up as a follow up but I'm sorry to insist in the in their risk appetite.
Speaker Change: I think it is a very important.
Speaker Change: 0.2 to the bank and let's see let me put that question in a different way because.
As the earnings season is ending and we could get.
Speaker Change: Deal from most of the banks.
Speaker Change: With a more conservative approach, even yesterday evening unimportant digital player.
Dave is a more conservative.
Speaker Change: View regarding the consumer finance.
Speaker Change: Until I'm, what I'm trying to understand here is.
Speaker Change: Is there going to be counter cycle.
Speaker Change: Player.
Speaker Change: Indias hub in India.
Speaker Change: This new cycle.
Speaker Change: Or what's in there.
See different way than the than the other banks because just to give you an idea talking to many of the banks. The expectation is that they are not expecting an acceleration a long role for 2025 again theyre not guiding for a better mix.
Speaker Change: So a more conservative approach, so I'm trying to understand here.
Speaker Change: I I I I got and I could hear what are what you will mention about the cherry picking but again I think that.
Speaker Change: If you could elaborate more here I think that that would be really really great and my second question is regarding the four nine chic seeks resolution from the Central Bank, we could see some uptick.
Speaker Change: And <unk> an appeal for me during the quarter and I, if I'm not wrong. You mentioned that is related to 490 <unk> Mr. Ludovico, what what could what would be the main packs you were expecting for the next year not only in the capital but also in the provision expenses. Thank you.
Speaker Change: Stable growing speaking here I'm going to cover the credit appetite again.
So you.
Speaker Change: You might no deaths, Inc.
Speaker Change: And I would say maybe also myself, we are known in the market for being too conservative and we have had a lot of push backs.
Speaker Change: For the past I would say, maybe four or five years on that topic theatres should grow faster you should give more credit limits on the credit card and so on and so on.
Speaker Change: And we have always took a different approach. So first of all not being the more in the lineup. This is very important for US. We always wanted to have the short term duration portfolio. The long term duration portfolio. The ones that are collateralized payroll mortgage homac, but they're ones also that they arent not quarterly.
And have a good names what do we see to date net <unk>.
Speaker Change: In spite of the macro we're not changing our credit appetite, we're still growing at 30%, 30% ish. This year and this is what we foresee for 2020 five the reason behind that whose job is quite simple again.
Speaker Change: First of all we still have a very small market share most of the credit portfolio that we operate and look we're not talking about one or two but maybe five or six different credit portfolio. So.
Speaker Change: Market share growth is important for us and we have the ability to grow.
Speaker Change: Without impacting the market second a good diversification.
Speaker Change: Consumer finance and collateralized portfolio.
Speaker Change: Homes, we're still grow in the payroll loan risk through gruen on home acreages to growing the market side and left we have a very good cost of funding. This is very important first to again be able to cherry pick the best clients without jeopardizing our needs. So uses our approach still growing but again.
Speaker Change: Compounding and compounding and compound we don't want to just gave a big stretch.
As we see some other players doing and Dan retract very fast so we want to keep compounding and compounding and do you see room for us to to grow without being a big player in the market depth.
Speaker Change: That's our approach and whereas speak to it that's how we're going to operate most likely 2025, and probably also 'twenty 'twenty six okay. Thank you very much and central Colbert the.
Speaker Change: The.
Speaker Change: Yeah.
Speaker Change: They wrote the Neuromodulation.
Speaker Change: We sell high and so on for 96 six of our solution as you know since 2022, we have been reporting our results on their F or S. So therefore, most of the impact from button got play a foray for us have been already accounted for the two impacts yet.
Speaker Change: Who do come are one increasing stage III formation and this is due to the longer period during which renegotiations will remain stage III before being moved to stage two or waived enough is called the heating period. We started doing are anticipating a bit of these impact this quarter and that can be seen in there.
Speaker Change: Stage III formation, they're only going up from one seven to $1 nine.
Speaker Change: And then the same logic applies to MPL formation due to the extended periods in which loans can remain in our balance sheet before being written off as NPA formation and the trend that will go up as a consequence of a 496. There is no impact on cost of risk provision expense as a consequence of these.
Speaker Change: Nor results or tier one, but he is emblematic of mpls TP information as I just mentioned.
Speaker Change: That was super clear, Zillow, and and and and essentially thanks for the answers just a follow up as well.
Speaker Change: Would you accept.
Speaker Change: Higher <unk>.
Speaker Change: Any pls, whether you have higher N I M <unk>, which means that what is important here is the risk adjusted N. I M. India has seen this news cycle and gifts cycle.
Speaker Change: So that's a way to win M. The metric that improved the most this quarter before and after cost of risk a west name and we're very proud of and the way we're allocating capital in a way.
Speaker Change: That is playing out sequentially quarter after quarter with consistency since the beginning of the last year. This is a combination of many different factors. One is the employment of our excess liquidity from the 100 C. D. I a liquidity pool into a loan book then we also had a an interesting improvement sequentially on the loan.
Mix now as we said in the opening remarks every T. S. I'll make with D, which are 30 or 40% plus roe's represent a significant portion of the portfolio and they continue to gain share and also legacy portfolio is likely one of the reasons suite was subsidy I M is also a M.
Decreasing and participation in the loan portfolio. So the combination of all of these factors together, but and as the consumer finance to Brasil portfolios has been driving NII Costa Rica, depending on the mix on the unsecured side with crude or not of Cups embrasure, we don't know until which now in that portfolio will grow but overall there.
Speaker Change: Risk adjusted NIM, as we call it or the new Mexico's of risk. We'll continue we think the trend that we have been seeing which are we're very proud of.
Speaker Change: Excellent excellent. Thank you very much.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Mr. Jorge Kuri from Morgan Stanley. Mr. Carey, We're now opening D. Audio so you can ask your questions live.
Speaker Change: Please go ahead Sir.
Hi, This is Andrew guarantee from his team at Morgan Stanley just wanted to ask quickly about the NIM you know in previous quarters. You had mentioned that you see a path of roughly 20 basis points I believe in upside each quarter are coming from portfolio repricing, mostly.
Speaker Change: And I just wanted to see if that has kind of changed.
Speaker Change: Or whether your views stays the same and then I guess just in general and with respect to NIM over the coming quarters, what you see as the various moving parts on cost of funding repricing.
Speaker Change: Et cetera. Thanks.
Speaker Change: Andrews and Dale here again and in line with what I answered to will tell we think that the NIM dynamic will continue to play out we don't want to point out point of view, specifically, but the trend is in line with where we have seen in the prior year.
Speaker Change: Or just as a consequence of digest manage on the capital allocation, improving in and being more efficient or do a quarter basis.
Speaker Change: Okay.
Our next question comes from Mr. Mario Pierre from <unk>.
Speaker Change: Bank of America, Mr. Pere, we're now opening the audio so you can ask your questions live.
Speaker Change: Please go ahead Sir.
Speaker Change: Okay.
Speaker Change: Apparently you Mr Perez no longer with US, let's move onto the next question, which is from MS. Nihon Agarwalla from HSBC.
Speaker Change: Zakopalova, we're now opening the audience. So you can ask a question lives. Please go ahead ma'am.
Speaker Change: Thank you very much just a quick follow up on the <unk> portfolio, you mentioned that you have 8% sure.
But in the main cautious didn't grow up in fixed financing are there any specific trends that you're seeing which makes you a bit cautious I insist more seeing how the portfolio performed and then continue to grow because it's pretty much about extending credit to customers who are already approved with your credit card. So if you could elaborate.
Speaker Change: The trend that is being there and second question is on the global economy mentioned that you.
You can do a lot of the noble Don for you talked about the golf piece what countries do you have in mind.
Speaker Change: What would it imply in terms of investments required to Golar Street did go out the door.
Speaker Change: The countries how scalable.
Speaker Change: Thank you so much.
Speaker Change: And he has your own speaking thanks for the equipped for both questions I'm going to start from the last one we haven't decided yet swam in what's going to be our next markets are rare in our lives and some options met again with.
Speaker Change: We don't want to go to a place where we need to get to deploy capital license and everything you went to go to a place where it can operate through a bank as a service partner, where we can launch our global account in bring deposits.
Speaker Change: Shopping and buying power.
Volume PPV for our U S operation businesses, our approach going forward. The same we did with Brazil.
Speaker Change: Regarding the first question was about sorry can you repeat the first one.
Speaker Change: Okay.
Speaker Change: Thanks financing.
Speaker Change: And what are you seeing in terms of quality.
Speaker Change: Oh, Okay. So similar to what I answered before Nihon <unk> and am I agree you have a big market share in pigs.
Speaker Change: We only a proof for fixed financing the clients that we have a credit limit for them and the credit cards at the credit card product, but on the other hand, we know that its something new so every time, we run our models and we try to get data from how the clients are performed tried to build all the cohorts to see.
Speaker Change: If they are doing better or worse than what we had to predict we need to get data and data and more cohorts more cohorts and maturing. So we're still learning we're still trying to.
To make sure that to have the right pattern from the clients that are using this product, let's remember that this product was unveiled I'd say, maybe one year and a half maybe two years ago. So it's a very very new way of doing consumer finance. So we are improving faster in terms of the.
Speaker Change: The growth that were putting.
Speaker Change: Percentage wise, but we need to learn and make sure that we're not going to put Ah Ah Ah Ah Ah beds, I would say our credit portfolio on our books, so again proceeding, but with cautious nethon approach and.
We do see now so far good delinquency ratio on that portfolio.
Speaker Change: And what are the main use cases for the big fan I think Todd did you see that your customers want beef what.
Speaker Change: Do you see it more in for like buying on your platform like more outside your platform what are the main use cases.
Speaker Change: Nihon Yeah, So farm ballpark was 265% consumer to consumer CPUC and 35% consumer.
Speaker Change: It will be consumer to business.
Speaker Change: And I don't have the number here about how much of that is within our ecosystem, but we have a lot of transactions would be an oracle system again, because we have up there.
Speaker Change: Big market churn picks as I mentioned before so.
Speaker Change: New product and let's see how it's going to it's going to play out.
Speaker Change: On the following we are following years.
Speaker Change: Let's say, thank you Phil Michelle.
Speaker Change: This concludes our question and answer session I would like to yield the floor back to Mr. Shuang Victor Menon for his closing remarks.
Speaker Change: Okay.
Speaker Change: Thank you. Thank you operator first of all thank you everyone for the audience again, a very good quarter, we're very happy.
Speaker Change: The team myself with what we have printed this quarter than what we have a hub for intra.
Speaker Change: Also after listening to the Q&A.
Speaker Change: Reading all the reports I would say that there are two key methods that are likely to take home. So first one a bit.
Speaker Change: Business wise, we are gaining market share across all verticals and I mean August seven verticals that we have a thing this is very important for us.
Speaker Change: Upsell and cross sell help us to improve profitability.
Second <unk>.
Speaker Change: Financial Wise, we are improving our names quarter over quarter deaths that were doing the best we can in terms of optimizing our capital structure.
Speaker Change: This is what we haven't been working hard for the best three or four years and we are delivering this improvement.
Thank you very much for time, so you'll soon on the next.
Speaker Change: Quarterly results on 2025 have a good day.
Speaker Change: Okay.
Speaker Change: This conference call is now concluded interest IR Department is at your disposal to answer any additional questions. Thank you for attending today's presentation have a nice day.
Speaker Change: Goodbye.